Professor Elam

As usualTom Sowell cuts through the rhetorical clutter. I would add that Greenspan's way too low interest rates and the Bush policy of build build houses added to the mess.

At any rate, we have, surprise, the foreign exchnges pretty much bouncing back to even after an initial sell off last night, I would have thougth they would be down further.  Perhaps that is a vote for the idea that we need a better bailout bill?

While no one wants to try to 'catch a falling knife ( the danger of buying a market in panic, where is the bottom) this also illustrates an interesting point.  Baron von Rothschild observed that one must buy when there is 'blood in the streets' he meant that literally, revolution brings great values, if of course one picks the winning side…

Are there winners you would like to own in the middle of this panic, SKT, the outlet mall hardly budged yesterday, pipeline stocks are down but above previous lows, the transport ETF IYT has pulled back to support at its 200 day moving average, buy and hold, panic out of positions?  Fun fun and a whole four days of trading to go.

This is why we study accounting and finance, we need to understand the language and statements of companies. We also need to understand the psychology of markets which is why I highlight technical analysis and psychologic studies like Elliott Wave and Socionomics.

Socionomics is the  idea that events are shaped by human emotions. The best laboratory of those emotions on display is the stockmarket, this week is a case in point. At Dow 14,000 pop culture was happy and buying, today the culture is unhappy and selling. 

Words matter, someone on tv just made the point that the word BAILOUT is a negative connotation, cleraly the people are NOT for a bailout.

A bounce back in the markets is expected, though I am buoyed that the foreign markets did not close down last night.  I doubt the low is in quite yet but I expect to see at least a near term low this week.

Irony of the Week While eveyrone recoiled at the idea of a $700 B bailout, more than $1.2 trillion exited our markets just yesterday, way to go Congress….